Mechel: H1 loss widens to RUB 43.2bn, net debt reaches RUB 278.6bn

28 августа Мечел раскрыл обобщённую промежуточную отчётность за первое полугодие 2026 года. Выручка упала на 22,9% год к году, до 117,4 млрд руб., операционный убыток составил 17,0 млрд руб., чистый убыток – 43,2 млрд руб. Разбор показывает, что давление на результаты оказали слабые цены на уголь и металлопродукцию, а также рост финансовых расходов, и что долговая нагрузка продолжает расти.

Key takeaways

— H1 revenue fell 22.9% to RUB 117.4bn, with the steel segment hit hardest

— Operating loss was RUB 17.0bn – versus a RUB 22.6bn loss a year earlier, but ex-impairment the picture is worse

— Net loss widened to RUB 43.2bn – driven by finance costs of RUB 26.3bn

— Debt rose RUB 34bn over 12 months to RUB 278.6bn, with covenant breaches on loans

— Operating cash flow over the last 12 months is RUB 46.4bn – insufficient to cover interest payments

— No dividends paid or expected – the model assumes zero payout

— The company plans to ramp up coal output in H2, but risks remain

Key figures, RUB bn

H1 revenue fell 22.9% to RUB 117.4bn, with the steel segment hit hardest

For H1 2026, Mechel's revenue was RUB 117.4bn, down 22.9% year-on-year. The steel segment bore the brunt: its revenue fell from RUB 107.8bn to RUB 73.2bn – a 32% drop. The mining segment lost less – RUB 22.3bn versus RUB 26.6bn – while the energy segment actually grew, from RUB 18.0bn to RUB 21.8bn.

The report notes that in Q1 prices for most steel products continued to decline due to weaker market conditions and limited domestic demand. In Q2, coal prices recovered, supporting the mining segment, but the overall half-year trend remained negative.

Operating loss was RUB 17.0bn – versus a RUB 22.6bn loss a year earlier, but ex-impairment the picture is worse

The operating loss for H1 was RUB 17.0bn, versus a RUB 22.6bn loss a year earlier. However, last year included RUB 14.4bn of goodwill and asset impairment, while this year only RUB 0.8bn. Excluding that, the underlying operating result worsened: the loss from core operations rose from RUB 8.1bn to RUB 16.2bn.

Gross profit nearly halved – from RUB 24.9bn to RUB 13.5bn. Selling and administrative expenses declined, but not enough to offset the margin squeeze. The steel segment's gross profit turned negative – minus RUB 1.1bn – versus a positive RUB 13.4bn a year earlier.

Net loss widened to RUB 43.2bn – driven by finance costs of RUB 26.3bn

The net loss for H1 was RUB 43.2bn, versus a RUB 40.5bn loss a year earlier. The loss widened despite a smaller operating loss, due to finance costs that remained high: RUB 26.3bn versus RUB 26.8bn a year earlier.

Interest on loans and borrowings was RUB 20.1bn, lease interest RUB 2.1bn, and penalties on payables RUB 1.3bn. The tax charge was RUB 1.7bn, compared with a tax benefit of RUB 2.5bn a year earlier.

Debt rose RUB 34bn over 12 months to RUB 278.6bn, with covenant breaches on loans

Net debt at the end of H1 was RUB 278.6bn, up RUB 34bn over the last 12 months. Debt is rising amid loss-making operations and high interest payments.

The report discloses that the company breached payment obligations under certain loan agreements with foreign banks, as well as some financial and non-financial covenants. As a result, RUB 245.7bn of debt is repayable on demand, including RUB 88.8bn of long-term loans reclassified as short-term. The company does not have sufficient resources to repay these obligations but does not expect demands from creditors in the near term.

Operating cash flow over the last 12 months is RUB 46.4bn – insufficient to cover interest payments

Over the last 12 months, Mechel's operating cash flow was RUB 46.4bn. In H1 2026, it was RUB 27.2bn versus RUB 33.2bn a year earlier. The decline is due to lower profit and weaker working capital.

Interest payments in H1 were RUB 14.3bn, and including loan repayments and leases, the outflow was much larger. The company raised RUB 10.0bn in new loans but repaid RUB 12.2bn, indicating a net outflow on debt financing. Cash at the end of the period was just RUB 0.5bn – extremely low for a company of this scale.

No dividends paid or expected – the model assumes zero payout

Over the last 12 months, Mechel paid no dividends, and our model does not expect any payouts in the near term. The fair yield of 12% and payout ratio of 0.5 of profit are unrealistic given the current loss and debt burden.

The company is directing all available funds to debt service and maintaining operations. The report states that in H2 2026 and H1 2027, additional financing of about RUB 47bn may be needed to cover expected outflows.

The company plans to ramp up coal output in H2, but risks remain

Amid the Q2 recovery in coal prices, Mechel plans to significantly increase output in H2 and reach about 10 million tonnes for the full year. The company is adding new mining equipment, including via finance leases, and plans to resume contractor work.

However, uncertainties remain: volatility in export coal prices, ruble appreciation, logistics constraints, and sanctions pressure. The report explicitly notes the existence of significant uncertainty that raises substantial doubt about the group's ability to continue as a going concern.

Valuation on the latest reported figures

Bottom line

Bottom line: Mechel ended H1 2026 with a net loss of RUB 43.2bn and rising debt. The improvement in operating results versus last year is only due to lower impairment, not a real recovery. Finance costs remain a heavy burden, and covenant breaches create the risk of accelerated repayment. The company is betting on higher coal output in H2, but that does not solve the debt problem. For shareholders, the key question is whether the company can reach a restructuring agreement with creditors without diluting equity.